That heavy oil is going to save our bacon has become almost a home truth among certain disputants involved in the peak oil controversy. This variously gloppy, gooey, or tarry substance—the pulp residue of dinosaur juice, as it were—is undeniably superabundant, and, if it can only be cost effectively harvested—so the thinking goes—then we can go on much as before, driving large and inefficient cars and enjoying cheap air travel to anywhere in the world, provided we don’t succeed in cooking ourselves with greenhouse gases.
Purportedly as many as 7 trillion barrels of oil can be derived from the sticky stuff, or at least twice as much oil as in all of the remaining light crude oil reservoirs on the planet. Unfortunately, there’s a problem though. Whereas fifty to seventy-five percent of light crude can ultimately be wrested out of the ground by one means or another, albeit at increasing cost as the reservoirs become depleted, the recovery rate for heavy oil is way worse—in the ten to twenty percent range by the more pessimistic estimates. Thus most of those wonderful hydrocarbons that should be filling our gas tanks and producing plastics to build more iPods and cell phones are dangling just out of reach, as though all those dead dinosaurs and pterodactyls whose mortal remains the heavy oils are were mocking us from the grave, saying in effect, “you too will be dinosaurs, proud mortals. Your world also will run out of resources, and you will endure your own extinction event. And someday hyper-intelligent cats will emerge from the evolutionary struggle and drive gas guzzling sports cars burning your hydrocarbons.”
One of the key questions in the energy realm then becomes can this miserably low recovery rate be greatly augmented? And here there is much dispute.
Heavy Oil – Slow to Flow
Heavy oil actually came into general use before light crude. Asphalt derived from bitumen has been used for water proofing for thousands of years in the Middle East, while bitumen later served as a source for the construction of the Macadam roads that first appeared at the end of the eighteenth century in England and of which many millions of miles all told have since been constructed throughout the world.
A relatively small amount of fuel oil for illumination was derived from bitumen in the nineteenth century, but light crude was the preferred feedstock from the time that Pennsylvania’s extensive fields came into production in 1859. And so it went for nearly a hundred and forty years. Vast deposits of heavy oil and bitumen were discovered in various places—more in Canada and Venezuela than anywhere else—but mostly they stayed in the ground because the economics of harvesting heavy oil for fuel were so unfavorable vis a vis those for conventional light crude.
As late as 2001, Kenneth Deffeyes, eminent Princeton University oil geologist and author of the notorious “Hubbert’s Peak”, was expressing doubts that heavy oil would ever prove economical as a resource. And then of a sudden, seemingly overnight, in fact, gigantic surface mining operations commenced in Alberta’s tar sands regions, operations which dwarfed the strip mining of coal in the U.S. from which much of their technology was derived. Production went from nothing to over a million barrels per day, or more than 1% of the total petroleum output for the entire world. And surely that output will rise to three million barrels and perhaps as many as six million barrels over the course of the next two decades. And if that rise is accompanied by a commensurate decline in conventional resources, Canadian bitumen could then account for as much as 10% of all of the petroleum on the market in less than twenty years. Not bad for a resource formerly deemed uneconomical or, worse, the energy equivalent of fool’s gold.
Still, the doubters have been vocal in their disdain for the long term prospects of the Canadian tar sands industry, pointing out that the bitumen that is amenable to mining operations comprises only about three percent of the whole, and dismissing the various methods for extracting oil on the spot in the ground, known collectively as in situ mining or drilling techniques—claiming that the latter would remain experimental for years if not for decades, and that the role of the tar sands in the global petroleum industry would therefore remain negligible.
Unfortunately for the credibility of the detractors this does not appear to be the case. After a scant five years of production, in situ methods have already moved from the realm of the experimental and into practical use. “Steam assisted gravity drainage [a leading in situ technique] already accounts for thirty to thirty-five percent of the oil recovered from the tar sands,” notes Dan Woynillowicz, a senior policy analyst with The Pembina Institute, a Canadian environmental organization. “It’s well beyond the experimental level now.” Brad Bellows, a spokesman for Suncor, one of the largest tar sands lease holders concurs. “We’ve been doing in situ extraction since 2004 and it now accounts for fifteen to twenty percent of our production. It will be more in the future as we perfect new techniques.”
Clearly, in the short space of half a decade, the Canadian tar sand industry has already moved into second generation production technology, and is now contemplating a transition to third generation techniques. Indeed, a fourth generation is already discernible. As recently as two years ago industry consultancies such as LENEF Consulting were complaining about the under-funding of basic research into relevant areas of excavation and refining technology, but today, with oil flowing freely and profitably, companies are swiftly proceeding to field trials with new techniques, and the gap between concept and commercialization is narrowing. The traditional thirty year time line for the maturation of new petroleum production processes that many have assumed would prevail indefinitely appears to have been replaced by a greatly accelerated innovation cycle which will see new techniques in place within a few years of the first field trials.
So, given the rapid uptake of technical innovations in this specialized area of petroleum production, and the way that the industry has managed to defy the naysayers and to flourish mightily after less than a decade of commercial operations, one might assume that the tar sand moguls are poised to assume dominant positions in international oil markets, supplanting the Middle Eastern suppliers and moving the center of production decisively to the West.
But to make that assumption one would have to ignore or make light of the challenging geography of the bitumen deposits and the intractable problems that it represents.
Down and Dirty – the Geophysics of Heavy Oil
Heavy oil is arbitrarily designated as such when its viscosity, conventionally represented by a specific gravity figure, exceeds a certain level. That level marks the point where the oil cannot be pumped without being either diluted or melted, and thus where conventional extraction techniques begin to falter.
Bitumen, which constitutes the bulk of the Canadian resource, lies on the far end of the continuum and is the thickest and grittiest form of petroleum and the least amenable to recovery by conventional techniques. By contrast, most of the heavy oil in Venezuela is relatively light and fluid although bitumen is to be found there as well. Unfortunately, the Venezuela oil industry is now largely closed to foreign observers, and current figures on heavy oil recovery are unreliable. Most authorities believe, however, that the preponderance of oil flowing out of Venezuela today comes from that nation’s still abundant light crude reserves, and that extensive heavy oil recovery awaits a more favorable political climate.
In any case, increasing weight generally spells greater difficulties with recovery when it comes to heavy oil, and bitumen tends to pose the greatest problems, although not all of these are attributable solely to increasing viscosity and molecular weight as it turns out. The manner in which the bitumen is disposed within the reservoir also has a major bearing upon the cost effectiveness and indeed the ultimate feasibility of extraction.
Bitumen is easiest to extract when it lies at or near the surface of the ground in thick deposits extending down many yards. When it is so disposed, it may be scooped out of the earth with earthmoving equipment (large shovels are generally used today). Unfortunately, only about 1% of the total is right on the surface waiting to be removed.
Mining equipment of one sort or another can also be pressed into surface when bitumen is located just below the surface—just below being anywhere from a few feet down to about a hundred and sixty feet. One still is performing what is in effect open pit mining, but now a bigger hole must be dug to reach pay dirt.
At deeper levels extraction becomes much more problematic, and the lease holder has to resort to newer, less proven techniques coming under the general nomenclature of in situ methods. While a considerable number of such methods have been developed or proposed, and collectively they exhibit significant diversity, all share one essential similarity. Whereas with surface mining techniques the operator makes no attempt to process the tar sand while simultaneously extracting it, in the case of in situ methods processing and extraction are one and the same, although, as one might expect, one is not pulling refined petroleum products out of the ground. Rather, the objective is to produce a stream that is maximally petroleum oil and minimally grit and sand so that filtering requirements are greatly lessened once the bitumen stream reaches the surface.
It must be noted, however, that regardless of their depth, some types of bitumen deposits are currently uneconomical to work and are likely to remain so for years if not indefinitely.
Some 26% of the bitumen in Canada is contained in carbonate rock formations rather than in sandy soil. No proven technique has been developed for recovering bitumen from carbonates and there are no promising experimental techniques either. Many petroleum geologists consider carbonate bitumen to be permanently unrecoverable.
Another 25% of the total reserve is made up of so-called “thin oil” consisting of thin layers of bitumen representing relatively low concentrations of the resource. While thin oil can be tapped by either mining or in situ techniques depending upon its depth, its diffuse nature makes it inherently expensive to harvest. At some point, when all of the more promising deposits have been worked, thin oil may begin to appear economically promising, but that time must surely lie far in the future.
More on Mining
Alberta tar sand is frequently not especially granular in consistency, and is normally loaded into onsite crushing apparatus immediately upon recovery. When it has been adequately pulverized, it is generally mixed with water to form a slurry and the slurry is piped to the refinery in much the same way that coal is transported via pipeline. Large amounts of water are utilized in the extraction process and nearby sources of water are a must for the execution of major mining operations. Much of the water can be recycled in mining operation, but current recovery methods generally result in significant contamination of ground water in the area. Mining operations also leave what are known as “tailings”, hillocks of sand and crushed rock that have been stripped of their oil. These tailings take up approximately twice the volume of the original tar sand extracted from the earth and so they cannot easily be reburied. Nowadays they simply litter the landscape surrounded by small, shallow bodies of polluted water known as tailing ponds.
Incidentally, one U.S. startup, Chattanooga Corporation, claims to have developed a process for refining both bitumen and oil shale that does not involve extensive pulverization and does not leave tailings. Claims president Marty Kaperski, “we can work with feedstock the consistency of coarse sand. There’s not much crushing involved.”
In Situ Recovery Methods
Several in situ techniques have been developed for exploiting deep deposits of bitumen, some fully commercialized and some still experimental. All involve either heating the tar sands to liquefy the hydrocarbons and to cause them to flow or attacking the deposits with diluents or solvents which will also produce a liquid hydrocarbon stream. The heating techniques are predominant today and seem likely to remain so for the foreseeable future.
Cyclic Steam Stimulation and SAGD (steam assisted gravity drainage) may be considered the established thermal methods for extracting liquid in liquid form. In both cases steam is used to liquefy the hydrocarbons and cause them to flow from the sandy matrix in which they are contained.
In the cyclic steam stimulation process, which also used as an enhanced recovery method for conventional light crude and is affectionately known as “huff and puff” in the industry, a single tunnel is used to admit steam and remove the liquefied bitumen. Steam is injected under high pressure for a period of relatively brief duration, allowed to condense, and the mixture of oil and water is then pumped out of the drill hole.
Notes Dan Woynillowicz, “huff and puff is old technology and is on the way out in the oil sands.”
SAGD, the up and comer among in situ techniques, uses horizontal drilling techniques to excavate two or more drill hoes, one through the bitumen bearing strata, and one or more immediately below. As in cyclic steam stimulation, steam liquefies the bitumen which drips down into the lower tunnel or tunnels where it is pumped to the surface. The advantages of SAGD over huff and puff is that it allows for continuous recovery of the bitumen and it is also more energy efficient.
Still experimental is the VAPEX technique (vapor extraction process) which uses a similar arrangement of horizontal tunnels as does SAGD but which uses liquefied ethane or butane to dissolve the bitumen rather than steam. Both capital and operation costs would appear to be substantially below those associated with SAGD but generally more tunnels are not needed to achieve equivalent production rates.
An also experimental and rather more widely publicized technique is THAI (toe to heel air injection). Somewhat analogous to SAGD, THAI utilizes combustion rather than steam to liquefy the bitumen. The operator ignites and burns a portion of the bitumen deposit in a controlled manner and the melted portion in close proximity to the burn drips down into recovery tunnels drilled below. The technique has been utilized for enhanced recovery of oil in depleted conventional oil fields but it has yet to be proven in tar sands though it appears promising.
The Limits of Technology
Even should VAPEX and THAI prove themselves in the field, most bitumen will remain inaccessible to oil prospectors unless as yet undreamt of recovery technologies are developed. With all current and emerging technologies for in situ recovery the bitumen strata must be bounded by relatively impermeable layers of bed rock that will contain the molten diluted bitumen while recovery is underway. Unfortunately most of the known bitumen deposits are not so favorably situated. The practical consequence of this limitation is that effective size of the resource is far less than we are led to believe.
Heavy Oil and Investment
In the main, heavy oil is not the province of wildcatters and startups. In the area of extraction, no one is doing small projects or the equivalent of single wells. Unlike conventional oil, bitumen and heavy oil cannot simply be pumped and shipped. Some initial process must be performed and that requires a massive plant facility in order to be cost effective.
A few startups have developed innovative technologies for refining heavy oil but in most cases commonly refining techniques are proprietary to industry giants such as Suncor, Shell, and Husky Energy.
We will look at some of the innovative refining techniques in our next installment on heavy oil, but to conclude here, I’ll state that heavy oil does not appear to offer the same opportunities for aggressive growth as do certain other segments of alternative fuels. The output of heavy oil will increase greatly in the years to come, but, notwithstanding the absolute size of the reserves it will not emerge as the successor industry to conventional light crude production.